The Danish Parliament recently adopted new Section 7P of the Danish Tax Assessment Act to provide, effective July 1, 2016, preferential tax treatment for certain share-based compensation granted to Danish recipients. Similar in concept to “incentive stock options” in the United States, under the new legislation, share-based compensation meeting certain requirements is not subject to taxation until the shares acquired in connection with the award are subsequently sold by the recipient. At the time the shares are sold, any gain is taxable as capital gains rather than as employment income. In order for Section 7P to apply, the following conditions must be met: Both the employer and employee must agree for Section 7P to apply in the award agreement. The award agreement must specify the nature of the award (e.g., shares, conditional shares, options, terms for receiving the shares, etc.). The value (using Black Scholes for options) must not exceed 10… Continue Reading
Ninth Circuit Holds Disgorgement Remedy Applies Regardless of Personal Misconduct of Issuer’s CEO or CFO
The U.S. Court of Appeals for the Ninth Circuit reversed a district court’s ruling interpreting Section 304 of the Sarbanes-Oxley Act (“SOX”) in an enforcement action filed by the SEC alleging that defendants participated in a scheme to defraud investors by overstating revenue by millions of dollars. SOX 304 requires reimbursement of certain types of compensation, such as bonuses or equity-based compensation received by CEOs and CFOs, within 12 months of the public issuance or filing of financial statements that are required to be restated due to a reporting error that is a result of “misconduct.” Previously, the SEC had sought to apply SOX 304 against CEOs and CFOs who were alleged to be personally involved in the wrongdoing leading to the restatement. However, in this case, “it is the [misconduct of the issuer of the financial statements] that matters and not the personal misconduct of the CEO or CFO.”… Continue Reading
IRS Issues Final Regulations to Facilitate Partial Lump-Sum Payments under Defined Benefit Pension Plans
Many defined benefit pension plans either do not offer lump-sum payments (other than small cash out amounts) or offer either a full lump-sum payment or an annuity form of payment. For those plans that offer an all-or-nothing lump-sum payment, the government believes participants who elect the lump sum may face a greater risk of outliving their retirement savings. The IRS has issued final regulations permitting a plan to explicitly split the accrued benefit into a portion payable as a lump sum and the balance payable in the form of an annuity without requiring the annuity portion to be subject to the Code Section 417(e) actuarial conversion requirements. The final regulations contain specific rules on the calculation of the two portions and include a number of examples that illustrate application of these rules. The final regulations are available here.
In May, we provided information regarding the EEOC’s release of final ADA and GINA regulations and their impact on wellness programs, which is available here. The final regulations indicate that when an employer offers multiple medical plan options but enrollment is not required to participate in the wellness program, the applicable wellness incentive limits for ADA and GINA purposes are based on the total cost of self-only coverage in the lowest cost plan option available. The final regulations did not explicitly address how to calculate the applicable wellness limits when multiple medical plan options are available and enrollment is required to participate in the wellness program, but more than one option can be used to satisfy the enrollment requirement. The conservative approach is to assume a similar outcome and base the incentive limits on the total cost of self-only coverage in the lowest cost plan option available that permits participation in… Continue Reading
The HHS Office for Civil Rights (“OCR“) recently announced an initiative to more widely investigate HIPAA privacy breaches affecting fewer than 500 individuals. Generally, all reported breaches involving 500 or more individuals are automatically investigated by OCR. Breaches involving less than 500 individuals will not automatically be investigated, but Regional Offices will increase efforts to investigate smaller breaches based on (1) the size of the breach, (2) theft or improper disposal of unencrypted protected health information (“PHI“), (3) breaches involving hacking, (4) the sensitive nature of the PHI involved, and (5) where numerous breach reports from the same entity raise similar issues. View additional information on OCR’s enforcement of HIPAA.
In Rev. Proc. 2016-47, the IRS recently announced that individuals who fail to rollover retirement plan distributions into a new retirement plan or IRA within 60 days may now self-certify to the new plan’s administrator or the IRA’s trustee that the individual qualifies for a waiver of the 60-day rollover requirement. Previously, individuals in such circumstances had to seek a private letter ruling from the IRS that they were eligible for the waiver. Under this new guidance, there are 11 reasons that support waiving the 60-day rollover requirement. The Revenue Procedure also contains a model letter individuals may use to certify they qualify for the waiver, which a plan administrator or IRA trustee may rely on, so long as they do not know the information provided by the individual is untrue. The new self-certification procedure is effective as of August 24, 2016. View Rev. Proc. 2016-47.
The U.S. Department of Health and Human Services (“HHS”) recently issued a “Fact Sheet” which discusses ransomware attack prevention and recovery under HIPAA, as well as the management of HIPAA breach notification procedures in response to a ransomware attack. According to the Fact Sheet, “ransomware” is a type of malicious software by which a hacker gains access to electronic data and then encrypts it with a key known only to the hacker, such that the data owner is denied access to it. The Fact Sheet provides helpful descriptions and specific examples of how the requirements of the security regulations under HIPAA (the “Security Rules”), which govern the confidentiality of a HIPAA covered entity’s electronic protected health information (“EPHI”), may be applied to prevent, detect, and recover from infections of EPHI by ransomware. Importantly, the Fact Sheet also explains HHS’s view that a ransomware infection of unsecured EPHI on a computer… Continue Reading
CMS has posted an updated Marketplace Employer Appeal Request Form dated July 2016. The updated form includes formatting changes to the contact information sections and is available here.
The IRS recently released draft instructions for Forms 1094/1095 that correspond with the draft Forms 1094/1095 the IRS released in July (please see our prior blog post on the draft forms here). Highlights of the changes and clarifications in the draft instructions for Forms 1094/1095 include: Certain transition relief available in 2015 remains available for non-calendar year plans for the portion of the 2015 plan year that ends in 2016; Certain coding used in Forms 1094-C/1095-C has been reserved for 2016; and Retirees who separated from employment should be reported the same as COBRA participants who separated from employment. Filing Dates and Extensions: To the IRS. The 2016 Form(s) 1094-C and accompanying Forms 1095-C must be filed electronically with the IRS by March 31, 2017 (February 28, 2017 if paper filing is used). An automatic 30-day extension is available if filed no later than the due date. Another 30-day extension may… Continue Reading
IRS Issues Proposed Regulations Addressing Certain Minimum Essential Coverage Reporting Issues Under Code Section 6055
The IRS issued proposed regulations on August 2, 2016, clarifying certain minimum essential coverage (“MEC”) reporting issues related to IRS Forms 1095-B and 1095-C, Part III. Form 1095-B is used to report MEC by insurance carriers for fully-insured MEC and by small employers with self-insured MEC who are not otherwise subject to the employer shared responsibility provisions of the Affordable Care Act. Form 1095-C, Part III is used by large employers with self-insured MEC. A change that is of significant interest to reporting entities is the revised safe harbor for soliciting TINs (e.g., SSNs) from covered participants. The revised safe harbor still requires up to three attempts to obtain a covered participant’s TIN pursuant to specific procedures set out in the proposed regulations. The covered participant’s date of birth may continue to be used as a substitute for solicited TINs missing when reporting is due. A reporting entity does not… Continue Reading